Investors in Cambodia’s garment industry are increasingly purchasing modern equipment as they look to produce higher value-added products to compete in the international market and counter rising labour costs, an industry insider said yesterday.
Ly Tek Heng, operation manager at the Garment Manufacturers Association in Cambodia (GMAC), said rising factory worker wages were thinning margins on the production of low-value garments and footwear in the face of fierce global competition.
“If we produce low-value products while the cost of labour keeps rising, we cannot compete,” said Heng. “So, big investors are going to use more modern equipment and machinery, which lets them sell their products at a higher price.”
“Those [factory owners] who don’t upgrade their machinery and equipment to reflect to market’s need are facing tougher competition in the market,” he added.
Heng’s comments came during a press conference yesterday on the sixth Cambodia International Machinery Industry Fair (CIMIF) and Cambodia International Textile and Garment Industry Exhibition (CTG). Both events are scheduled to open on August 26 at the Diamond Island Convention and Exhibition Centre.
Lasting four days, the industry events will bring roughly 200 exhibitors from 14 countries under one roof. Exhibitor booths at the CTG will feature a wide spectrum of machinery for the garment industry, including sewing machines, and automated knitters, cutters and ironing equipment.
Akai Lin, project manager of Yorkers Trade & Marketing Service, the exhibition’s organiser, said the rising cost of doing business in China was pushing garment manufacturers to shift their production bases to ASEAN countries, including Cambodia.
Yet despite significantly lower labour costs, a rise in the minimum wage was driving demand for modern factory machinery.
“A lot of people from major garment factories are showing their intention to invest more in machinery,” he said. “They need this machinery to improve the quality of their products and to increase productivity.”
According to a study released last month by the International Labour Organisation (ILO), 88 per cent of Cambodia’s salaried textile, clothing and footwear (TCF) workers were at high risk of losing their jobs to automation and innovative technologies. The report outlined a number of technologies that stand to disrupt the sector, including 3D printing, body-scanning technology, computer-aided design (CAD) and robotic automation.
“For some countries like Cambodia, where TCF production dominates an undiversified manufacturing sector and makes up around 60 per cent of manufacturing employment, the impact will be felt more strongly than others,” the report said.